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Mumbai: The state-run Power Finance Corporation (PFC), which currently provides range of products and services for power projects in generation, transmission, distribution and renovation and modernisation of existing projects, has firmed up plan to expand its lending business to power equipment manufacturing segment.
PFC proposes to provide range of its products and services to equipment manufacturing for thermal and hydro plants, for nuclear plants, for transmission and distribution and for non conventioan energy. Besides, PFC proposes to provide finance for the development of fuel supply sources like coal, oil, gas and its distribution (rail network, gas pipelines) for power sector.
PFC in its internal presentation released on November 24 has noted that India is expected to have an annual capacity addition of hydro, thermal, nuclear and non conventional projects of 21,000 to 28,000 mw. This will be possible only due to the equipment manufacturing capacity addition proposed by various companies. PFC hopes to offer loan to such equipment manufacturers.
According to PFC's presentation, an investment of Rs 4,200 crore is proposed by Bharat Heavy Electricals Ltd (Bhel) to add power equipment manufacturing capacity, Bhel-NTPC JV is expected to invest Rs 6,000 crore to establish manufacturing capacity of 5,000 mw, balance of plant manufacturing and engineering, procurement, construction (EPC) activities. Engineering major L & T-Mitsubishi JV has proposed an investment of Rs 408 crore to establish manufacturing capacity of 4,000 mw of supercritical boilers for power plants.
Moreover, Jindal-Toshiba JV will invest rs 1,125 crore to establish manufacturing capacity of 3,000 mw of supercritical turbines and generators. Besides, Bharat Forge- Alsom JVs will establish manufacturing capacity of 5,000 mw of supercritical turbines and generators and manufacture auxiliary units of power plants.
PFC sources told FE, “There are couple of challenges in financing equipment manufacturing. There are uncertain market conditions in the forseeable future largely due to shaky interest rate markets, increasing cost of debt over the last few years, escalating forex rate which adversely affects costing of foreign currency denominated transactions. “
However, PFC proposes to catalyse development in the power sector. PFC is of the view that power sector capacity addition is being impacted by the non availability of power sector equipments and hence increase in equipment manufacturing capacity will give a further boost to power sector growth.
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